Small Canadian Broker Byron Capital To Wind Down Business – CEO

Ben Dummett broke the news that Canadian broker Byron Capital Markets Ltd. was winding down its operations due to a slowdown in revenue from the mining sector and downward pressure on commissions from trading securities for investors.

The story as it appeared on Dow Jones:
May 21, 2014, 12:52 PM EDT – Small Canadian Broker Byron Capital To Wind Down Business – CEO

TORONTO–Byron Capital Markets Ltd., a small Canadian broker, is winding down its operations due to a slowdown in revenue from the mining sector and downward pressure on commissions from trading securities for investors, the firm’s chief executive said Wednesday.

Toronto-based Byron Capital, like many small dealers, has struggled to make money recently, in part because of a slowdown in trading of resource stocks and fewer opportunities to help mining companies raise money.

Stocks of mining companies and other resource concerns dominate Canadian equity markets, but revenue from this group has dropped off precipitately for some brokers since a decadelong commodity boom fueled by China’s economic growth started to peter out in 2011.

“The current cost environment is too difficult to be profitable,” Campbell Becher, Byron’s chief executive, said in an interview.

Byron’s decision comes after Fraser Mackenzie Holdings Inc. last year shut its doors because of the difficult operating environment for small brokers. Earlier this year, Edgecrest Capital Holdings Inc., a newly created firm, acquired for an undisclosed amount Stonecap Securities Inc., an investment boutique that had been struggling.

Byron, founded in 2009, employs about 17 people across its sales, trading, stock-research and investment-banking operations. The firm has closed its sales, trading and research operations, but continues to offer some investment-banking services while it winds down. Mr. Becher expects the firm to end all operations in about three months.

The executive also blamed Byron’s woes on declining commission revenue for trading stocks. The trend toward greater use of electronic and direct-market-access trading is driving commissions lower, making its harder for smaller brokers to make money from this once bread-and-butter business.

“Agency trading has changed dramatically over the past five years,” Mr. Becher said. “There has been massive commission compression. Traditionally, agency trading covered the operating expenses of the firm, [but] it no longer does that.”

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